By Tiernan Ray

The Street today responds to this morning’s memo from Microsoft (MSFT) chief Steve Ballmer saying the company will reorganize around four engineering areas and will endeavor to bring a renewed focus to making devices and offering services.

The response of the stock has been positive this morning, the shares up 74 cents, or 2%, at $35.44.

Ballmer named twelve areas of responsibility with team leaders, such as an operating systems group directed by the head of the company’s Windows Phone software, Terry Myerson, and a “devices and services” group run by Julie Larson-Green, who took control of Windows after the departure of Steven Sinofskylast November.

Ballmer spoke to the opportunities he sees before the company:

Across Microsoft, we are facing incredible new opportunities. As devices become further integrated into everyday life, we will have to create new and extraordinary experiences for our customers on these devices. We are going to focus on completely reinventing experiences like creating or viewing a creative document and what it means to communicate socially at home or in meetings at work. We are going to immerse people in deep entertainment experiences that let them have serious fun in ways so intense and delightful that they will blur the line between reality and fantasy. And as we develop these new experiences, we will also support our developers with the simplest ways to develop apps or cloud services and integrate with our products. We will help businesses that find themselves in a new world of ever-mounting information to manage that information through greater enterprise information assurance. We will make these high-value activities priorities in our strategy.

Microsoft will host a conference call at 3:30 pm. eastern time, to discuss the realignment but some were already offering preliminary thoughts.

J.P. Morgan‘s John DiFucci, who has a Neutral rating on the stock, writes “We believe the new organizational structure reflects MSFT’s efforts to more clearly define its strategy – though that strategy still lacks clarity, in our opinion.”

The most important part may be the unification of management of multiple operating systems under Terry Myerson:

In our opinion, today’s announcement suggests that MSFT is looking to simplify its organization and strategy – however, what that strategy is remains a bit unclear to us at this time. Perhaps the most logical outcome of the realignment is that all operatingsystemswill fall under common leadership, which was likely necessary in order for MSFT to truly deliver a common platform across all devices. In addition, as with any restructuring, there is potential for disruption leading up to and during the execution of planned changes, especially if those changes remain unclear.

Matthew Hedberg of RBC Capital, who has a Sector Perform rating on the Stock, writes that “Over time, we would expect the company to alter its segment reporting to match the new structure.”

Hedberg thinks the changes can potentially better align the company’s products with its R&D, though he has a number of questions:

Some of our initial questions include tangible engineering benefits of the new structure, the potential for new software and hardware partnerships, additional details on the pace of innovation between devices and services, competitive dynamics, headcount plans, the potential impact to FY’14 operating expense targets and additional details around timing and the potential change to their financial reporting metrics.

BGC Financial‘s Collin Gillis sees plenty of red flags, including timing of the announcement, less of a chance of Ballmer being replaced, and less chance of a break up of the company:

You don’t make massive sweeping changes like this unless something is wrong. Today IDC reported Q2 PC shipments declined 11.4% YoY, marking the fifth straight quarter of declining shipments, the longest duration of decline in the history of the PC market. For those investors who may like to see Microsoft broken into separate pieces to possibly unlock value, this reorganization makes it harder to accomplish that goal. For those investors who may like to see a change in CEO, this reorg increases the power of the CEO in our opinion as there are no longer business group heads, although these people mostly remain in other capacities. We expect new reporting segments, which could result in the losses for the BING search engine to no longer be broken out. Major reorgs such as this can serve as a negative distraction for months before potentially offering benefits.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.